Chrysler cuts hybrid cost

Carmaker prices Durango, Aspen well below rivals

Eric Morath / The Detroit News

BOSTON — Chrysler LLC, the last of Detroit’s automakers to offer hybrids, is pricing them thousands less than their main competitor to try gain some foothold in the market.

The Auburn Hills automaker’s first two entries into the growing hybrid market, the 2009 Dodge Durango Hybrid and the 2009 Chrysler Aspen Hybrid, will be priced nearly $8,000 below their main competition, the Chevrolet Tahoe Hybrid, and should hit dealerships in August. Pricing starts at $45,430 for the Durango Hybrid and $45,570 for the Aspen Hybrid.

Production versions of the Hemi-powered hybrids were unveiled to journalists Tuesday in New England. The hybrids use the same two-mode system that powers the Tahoe hybrid.

The automaker’s hope is that the Dodge and Chrysler hybrids — priced about $3,600 more than their conventional gas-only counterparts — will help grow the brands’ overall sales by appealing to consumers looking for more fuel-efficient and greener vehicles.

"The hybrids will draw people in, especially those who want a full-size SUV but began to shy away because of gas prices," said Michael Berube, senior manager for Chrysler Marketing. "We think we have the right package at the right price. Our competitors may have to rethink their pricing."

A General Motors spokesman declined to comment on the pricing differences.

So far, automakers have failed to turn a profit on their first-generation hybrids, and Berube declined to say whether Chrysler would make money on these vehicles.

Neither Toyota Motor Corp. nor GM turned a profit on their first hybrids, so it’s unrealistic to think Chrysler would be able to with its first entries, said Jim Hall, an auto analyst with 2953 Analytics of Birmingham. He said Chrysler has priced its hybrids appropriately — a modest premium over their top-end, gas-only versions.

He said customers would balk if Chrysler tried to make the hyrbid SUVs profitable with a significant price premium or by offering only base-level interiors and equipment.

"You look at the pay off differently with these types of vehicles," he said. "The payoff comes from increasing your overall fleet fuel economy and adding incremental sales to an existing vehicle."

While the Chevrolet Hybrid may be Chrysler’s primary hybrid competition, comparing the GM vehicle to the Dodge Durango Hybrid is not quite apples to apples.

A base gas-only Tahoe is almost $7,000 more expensive than its Durango counterpart. The 4-by-4 Tahoe hybrid, which starts at $53,295, has a slightly larger V-8 engine, and some hybrid-only features, such as a light-weight aluminum tailgate.

The Durango and Aspen hybrids equal the Tahoe in highway fuel economy, 20 miles per gallon.

Chrysler and Dodge hybrid buyers are eligible for a $1,800 federal tax credit and can expect to save 200 gallons of gas per year — an annual savings of $800 at $4-per-gallon gas, according to the automaker.

Considering those figures, customers will pay off their hybrid premium in about two-years, Berube said.

"Previously, most hybrid buyers were mainly concerned about environmental impact," he said. "But at these price points our hybrids make both environmental and economic sense … and that should lead to conquest sales."